Indiathe R&D Powerhouse

Contrary to a recent report by a research agency about Indias decreasing
attractiveness for newer companies for setting up their R&D operations in the
country, the Indian growth story continues and there is no doubt about Indias
prowess as the biggest R&D hub outside the US. If the recent investment
announcements by VMware, a virtualization leader, or Yahoo! (which recently
announced the expansion of its India R&D operations with the launch of Yahoo!
Labs) are anything to go by, the momentum is picking up.

VMware has pledged an investment of $100 mn over the next two years to work
on entire portfolios of solutions for datacenter and desktop virtualization.
Before that, Cisco expanded its R&D operations as part of the setting up of
Ciscos globalization center. John Chambers has also annouced that about 50% of
Ciscos core R&D work will be done from India which is significant.

The India Advantage

The most important reason for this overwhelming success has been the
availability of talent pool in the country. According to Ajay Gupta, director,
HP Labs India, We have seen an increase in the availability of talent,
particularly the postgraduate talent that we have needed in the last two years.
Also, the ratio of attrition and churn is within comfortable limits.

A large number of companiesranging from big multinationals like HP and IBM
to vertical specific R&D centers, to home bred IT services companies like
Infosys, Wipro, Satyam, or TCShave been behind the success of India as an R&D
powerhouse. From the coming of Texas Instruments in the 1980s to Philips to new
technology vendors like VMware, India has come a long way and boasts of more
than hundred companies that are doing cutting edge product development, but
there is one catch here. The R (research) continues to remain a secondary
priority for most companiesaccording to some reports, only about 5% is research
and 95% is development. Almost all leading companies are present in India except
for a handful that includes companies like Apple, which is an exception.

Unlike China, where protection of IP has been a challenge for most companies,
the situation in India is different and favorable. Most companies, including IT
services firms like Infosys, have started filing more patents than ever before.
Most companies Dataquest talked to were unanimous that they were in India not
for cost arbitrage but for talent availability.

According to Aravind Sitaraman, VP and MD, Cisco Development Organization,
It is not the cost of operation that is going to attract investments in a place
like India; it is, rather, about talent, innovation, and growth.

Talent Crunch

Given the high-end R&D (research and development) done out of India, a
constant flow of talent is the need of the hour. The situation currently is
somewhat manageable, but the future looks bleak. According to Aravind Sitaraman
of Cisco, Talent shortage will soon be a reality if we dont take corrective
measures. We are starting to feel the pinch in the senior technical talent. He
adds a peculiar Indian mindset. He says, The social pressure in India for
engineers to become managers is immense. The moment someone has experience of a
few years, there is a huge pressure on him/her to become a manager. People have
to realize that there is a difference between technical competency and
managerial competency. The pressure on us is to either promote or let the person
go and this is when we lose good engineers. In the US, it is a common thing for
engineers to remain in technical positions for many years.

Cisco is addressing this tendency to move to managerial positions (from
technical ones) by deglorifying managerial roles and highlighting the technical
aspect. The company is also looking at an inorganic optionimporting talent from
the US and other locations. But Aravind Sitaraman of Cisco also believes that
there is no alternative to sustained coaching of people to believe that you
dont have to be a manger to grow.

Ponani Gopalakrishnan, VP, IBM India Software Lab, says, I think the
graduates that are coming out of engineering colleges are fine, but there is a
lack of practical experience during the course of their studies. We invite
technology students in our lab to work with us very closely on some of our
projects. Students have to learn to connect with their classroom learning to the
practicalities of what the industry is demanding.

Gopalakrishnan also laments about the gap that exists when it comes to high
level or PhD level technology training that people are getting. In fact, the
small number of PhDs that India is producing could create problems in the future
as companies would move up the value chain of R&D activities.

According to Ajay Gupta of HP Labs, What has not improved is the
collaboration with universities. The reason is that financially it is a bad
proposition to do a PhD in India. Getting a job is seen as more important than
pursuing higher studies.

Slow Moving University Engagements

It would be difficult to recall any breakthroughs that have emerged out of
the joint R&D initiatives that several companies have set up along with
education institutions, particularly IITs. Universities and engineering collages
have merely remained a source of talent pool rather than a collaborative R&D
that goes on in the universities in the US.

Most companies sponsor students and hire them once they have completed their
education. Aravind Sitaraman of Cisco agrees that the company has not been able
to pay adequate attention to this aspect but is actively working toward it.
Cisco has a program wherein it invites faculties to visit its facility and learn
about the technologies apart from asking alumni to visit the university to share
their knowledge.

Elaborating on some other gaps, Ponani Gopalakrishnan, VP, IBM India Software
Lab, says, Though some companies are maintaining some kind of relationship with
universities and institutions, there is a gap in terms of academic research and
technology directions, and market demands. It is not that technologies have to
be advanced to be successful, the technology can be just right and meet the
right requirement. The other gap, according to him, is the availability of risk
capital as the volume is not at the desired level. Sounding optimistic about the
shape of industry-university collaboration, Subramanyam GV of Infosys
Technologies, says, This ecosystem is slowly developing.

We localize Google applications that are relevant to India, and further innovate to meet the needs of our emerging users Prasad Ram, Head, R&D, Google India	The graduates that are coming out of engineering colleges are fine, but there is a lack of practical experience Ponani Gopalakrishnan, VP, IBM India Software Lab	Talent shortage will soon be a reality if we dont take corrective measures Aravind Sitaraman, VP and MD, Cisco Development Organization, India

R&D for the Indian Market

India is emerging as a big market for most products and services innovations
that come out of these labs. Staying closer to the market and working on things
that are relevant to the Indian market is the way to go for several companies.
HP is totally focused on India. According to Ajay Gupta of HP Labs, Providing
IT in the local language was one of our focus areas. The reason is that 90% of
Indians dont use the English language. This significant portion of the
population would like to use IT but are intimidated by the English language.

NXP even has a ready reference design that enables a company manufacture
mobile phone and sell under its brand. Companies like Onida and Videocon have
shown interest. Though IBMs primary focus is to work on technologies that can
be marketed globally, whenever there is some requirement from the Indian
customers, it is taken care of. For example, IBM Software Lab caters to Bhartis
specific requirements in managing their network.

We have to accept the fact that not every product or innovation that we work on would be successful Subramanyam GV, VP and head, SETLabs, Infosys Technologies	Financially, it is a bad proposition to do a PhD in India. Getting a job is seen as more important than pursuing higher studies Ajay Gupta, Director, HP Labs India	The talent challenge is at the product architect level. Rajeev Mehtani, VPand MD, NXP Semiconductors, India

According to Prasad Ram, We localize Google applications that are relevant
to India and further innovate to meet the needs of our emerging users. We build
comprehensive solutions that bring more local content online, deliver
applications relevant to the emerging users, overcome access barriers, provide
great user experience, and contribute to the economics of organizing and using
information.

Measures of Success

IT services companies are better off in the rate of success as they are
constantly in touch with their customers to augment their solution portfolio by
doing some fine tuning. While HPs efforts at creating some innovative products
(like Gesture-based keyboard) was laudable, though it did not get the desired
success in the market place. Elaborating on the reasons for the lukewarm
response, Ajay Gupta of HP Labs says, We thought licensing was the way to go
about it, and we licensed the product to some vendors but that did not work. He
also informs that HP is rethinking on this licensing strategy to make sure the
mistakes are not repeated. He also does not rule out the possibility of HP
directly marketing and selling the innovative inventions coming out of its India
lab.

According to Ponani Gopalakrishnan, VP, IBM India Software Lab, When we
think of advance technologies, either in research or product development, it is
very closely driven by interaction with our customer base and the market
requirements are directly captured before we even get started on something. The
success that we had in our lab has been significant. Talking about the degree
of success or innovations that will come out of R&D labs, Subramanyam GV, VP and
head, SETLabs, Infosys Technologies, says: We have to accept the fact that not
every product would be successful.

Sudesh Prasad

sudeshp@cybermedia.co.in